Why Radical Transparency Is Good for Business

The more transparent a business, the healthier it will be.

Posted Oct 15, 2012

Imagine you got to work on Monday and you knew exactly how you had performed the previous week, compared to everyone else, and could look up, in a moment, how everyone else was doing. Or a manager could go online, any time of the day or night, and see how his team was performing, who deserved a bonus, who was lagging, even if those people were customer service staff, or engineers. It would make everyone crazy, right?

Perhaps not.

  • quarterly objectives and results in detail including revenue and satisfaction targets;
  • weekly snippets of each individual's goals for the week;
  • up to the minute performance reviews, ratings, and bonus structures;
  • noted successes and failures, with notes for everyone to learn from;
  • career history at Qualtrics

Insights from neuroscience underscore that our brains work best when we no longer feel the need to hide, cover up our mistakes, or dwell on errors. We do better when we aren't mentally bogged down in "threat response" worrying about which of our colleagues is the boss' "flavor of the month," getting a hasty promotion, or badmouthing our work.

The principles of radical transparency improve business performance in terms of focus, engagement, and growing and recruiting talent. Here's a preview of how they work:

1. Focus: At the beginning of each quarter, every Qualtrics employee sets measurable and visible objectives and key results (aka OKRs). Each individual's progress and priorities are clear. This helps reduce the noise and clutter that can overload our prefrontal cortex with a sense of being "overwhelmed" about what our goals are.

2. Engagement: Radical transparency increases commitment and motivation to the corporate mission because employee data are explicitly linked to performance, ensuring high levels of fairness. A sense of real fairness turns out to be deeply rewarding to the brain, especially compared to a sense of unfairness that pervades many employees' darker thoughts, which activates a strong threat response. Everyone is benchmarked, all data are available for inspection and analysis, and all employees are treated accordingly. The reward response leads to increased engagement, from the strong sense of autonomy the approach brings about, defined as a sense of control over one's destiny.

3. Growing Talent: By making the successes of top performers accessible and easy to compare against the department or company as a whole, newer employees at Qualtrics are motivated to excel through mirroring the best practices of high-performing employees. This mirroring is extremely powerful in encouraging positive work performance. Another a big plus is that the right people get the promotions, meaning the people who are really consistently performing are rewarded, not the people just good at getting others to think they perform well.

Effron holds that many executives are far more ready for stronger transparency measures than their HR colleagues suspect. If that's true, they should check out radical transparency.

The 2013 NeuroLeadership Summit is going local with three days of events in three different locations. Click here for more information.  

(This post was originally published at the Harvard Business Review blog.)